The summit in South Africa (August 22-24) has unveiled the new BRICS development roadmap. Where is it going? How do the players themselves envision the future? Within what time frame? Following which paths? With which companions? With what strategy? In order to have a clearer view of this checkerboard, let’s examine at ease, the path already traveled and the possible responses following that landmark gathering.
The emergence of the BRICS was inevitable, although the birth of its name is anecdotal. The grouping represents a fundamental move forward towards a more impartial and multipolar world through emancipation from the hegemonic system. Its growing strength and attraction are increasingly felt. This is why the eyes of the whole world were trained on the summit, which took place in South Africa on August 22-24. We believe that we should focus our attention more on the long-term action plan that is being traced, than on the summit itself, which is only a moment in the execution of the former.
Two objectives are of paramount importance in their action plan, namely the introduction of a currency shared between the BRICS countries and their expansion in terms of new members. A review of progress made in this regard was done at the Summit.
The BRICS members have agreed to admit Saudi Arabia, Iran, Ethiopia, Egypt, Argentina and the United Arab Emirates in the group. Furthermore, the door is wide open, dozens more countries could join the bloc[1]. This enlargement is a great step forward in the development of BRICS and also in the transformation of the world.
Birth and development
By grouping together under the acronym BRICS, the four countries which had the highest growth rate, namely Brazil, Russia, India and China and later South Africa, the Goldman Sachs bankers did perhaps not realize that they were giving an identity to a tectonic shift at world level in the economic and financial fields and even beyond.
This movement reflects a basic need in the development of the Eastern and Southern world countries: the search for and creation of a fairer and more balanced global system for the greatest number of countries. In 15 years of existence, this informal alliance has already managed to stand up and acquire more substance and legitimacy. It will revolutionise and restructure the world. During the last summit, the BRICS has substantiated and started on its new roadmap, in front of an assembly of more than 50 participating countries from all over the world.
Why does BRICS strive to create an alternative system to the one that was established at the end of WWII? It is true that this time-tested latter one provided a stable framework to the world at large for decades and that the World Bank and the IMF joined forces for global recovery after the massive destructions.[2] However, this system, under American control, is far from fair and balanced, regarding the countries of the global East and South. The aid is given subject to conditions that the changes imposed will be accomplished, without taking into account the reality of the country, and the sums awarded incur high social costs under the logic of the Structural Adjustment Program. It has created more problems than solutions, for example in the case of Asian countries after the financial crisis of 1997-98.
An alternative architecture is more than necessary because G7 cannot represent, and does not reflect the world in relation to political, economic, demographic and aspirational criteria.
The BRICS group represents more than 40% of the world’s population and about 26% of the global economy and provides an alternative forum for countries that are outside the platforms dominated by traditional Western powers. Its influence and economic weight encourage more nations to join.
Encouraging results but some gaps remain to be filled
In terms of strategy, the BRICS follows a dual axis: while seeking to reform as much as possible the existing system, in particular the World Bank and IMF, it carries out actions with a view to creating and operating a new financial system as well as strengthening the autonomy of national currencies and preparing to create a common currency.
Regarding the working method, a step-by-step philosophy is practiced within the group, especially for strategic projects.
In this real world, the BRICS does not sit back idly dreaming, nor does it get lost in empty talk. It strives to help the countries of the Global East and South in particular, concrete instances, where it is urgent and possible to intervene. Thus, the BRICS created: the BRICS bank, the New Development Bank (NDB), encouraged the use of local currencies and set up the Contingent Reserve Arrangement (CRA).
The NDB is a useful tool to help needy countries through the financing of projects at acceptable rates, such as the transition to electrical buses (Brazil), hydropower plants (Russia) and water supply (India), etc.
Encouraging the use of national currencies for transactions has the effect of reducing dependence on US dollars.
The BRICS Contingent Reserve Arrangement (CRA) created in 2015 is a framework to provide support through liquidity and precautionary instruments in response to actual or potential short-term balance of payments pressures. With the CRA, the BRICS comes to the aid of countries that face short-term payment difficulties.
With the goodwill and efforts of its members, the BRICS has gradually become an effective and operational cooperation platform. In addition to these tangible benefits, the BRICS has given more voice to members and to the Global South, structuring a whole new geostrategic narrative and giving hope for the rise of a new world order.
At the same time, the BRICS should address some shortcomings if it wants to move faster and more solidly.
The BRICS does not exist as a formal organization yet, it is an annual summit between the supreme leaders of five nations. The presidency of the forum is rotated annually among the members. It is a cooperation platform. Circumstances play an important role. The members are in a fairly relaxed relationship. Despite their shared interest, they have divergent national interests determined by their respective geographies, histories, cultures and strategies. The articulation between these interests requires a lot of work and formalism.
The new objectives
Several programmes are to be launched or purused with more strength and speed.
Extension process
Given the growing number of candidates who wish to adhere formally or informally (more than 40 according to South Africa[3]), it has become urgent to come to an agreement about the details of conditions and the process of accepting membership, both for official candidates and for observers, who should wait before joining BRICS. India is leaning towards a stricter vetting process, while China seems to be pushing for greater openness. The idea of the “BRICS +” put forward by Yaroslav Lissovolik deserves a new reading.[4]
Expanding the group too quickly should be avoided before all have a clear idea of what they want. The experience of the European Union is an interesting case study in this regard.
There was convergence on the first batch of new members. Other applicants are to become partner-countries by the time of the next summit to be hosted by Russia. This addition also makes BRICS a forum for some of the world’s largest fossil fuel producers and exporters.
Creation of the BRICS currency
There is an ongoing discussion about the need for a common gold-based BRICS currency.
This new common currency would drastically reduce the dependence of current and future BRICS member-countries on USD, and provide autonomy, financial stability and protection against possible sanctions and turbulence linked to the cycles of the American economy. When agreed upon, it is bound to dynamite the existing hegemony and prepare the onset of the new global order.
For a subject of such importance and complexity, the process of convergence must be pursued among the BRICS countries, particularly between China and India, to further enable and develop the use of national currencies. In particular, regarding the internationalization of the Rupee, India chooses caution in the adoption of the initiative, since it fears that such a move might introduce unexpected complexities and uncertainties well-established business relations with its partners.[5] Intense discussions were expected to take place during the Summit (see below). Vladimir Putin spoke extensively about the ‘irreversible’ process of dedollarisation during his address to the Summit and emphasised the growing reliance on domestic currencies for trade between BRICS members and the diminishing role of the US currency,
Other issues on the agenda included discussions about geopolitics, trade and infrastructure development. Putin described Russia’s efforts to develop both the Northern maritime route (along the Siberian coast) and the North-South Corridor between the Indian Ocean and the Baltic Sea.
Convergence and divergence between members
The BRICS members totally share a common interest in wanting to establish an alternative global order, different from the current one under US leadership. At the same time, they may have divergent analyses and positions on a number of issues, for example in the case of India and China.
These two very large countries are neighbours and share a very long common border. Although conflicts have taken place in the past, Beijig and Delhi have a common interest in securing autonomy and development for the Global South. This does not preclude them from having divergent positions on certain subjects, such as the extension of the BRICS and the creation of the BRICS currency.
India has taken note, as all the other BRICS members, that the countries of the West (the US, Europe, Japan, etc.) are in relative decline. At the same time, India also keeps in mind that these countries are still very powerful players, with huge resources in terms of capital, technology and market. It is vital for India to continue cooperating with them while increasing its economic interaction with China. It is not about aligning with anyone else; India decides according to its own interests. India has a right to align with itself.[6] This is completely understandable.
The creation of the BRICS currency is one topic of intense discussion between the two partners. China seems ready to give it a go, while India sees this prospect differently, as was clarified by S. Jaishankar, the Indian Minister of Foreign Affairs.[7] Creating a currency is a long process which heavily impacts the economies of the countries concerned and which will shake up the world economy. Some precautions and preparation are just good common sense.
Once sufficient convergence is achieved between the leading BRICS members in the coming years, the idea of a kind of BRICS currency zone like the Euro Zone could be examined.
Are these the seeds of a separation? Absolutely not. These discussions are healthy within a structure of this scope and magnitude. As long as the areas of divergence do not exceed the points of convergence, this remains an internal matter, manageable within BRICS.
The danger of a hybrid war against the BRICS?
Not everyone wants to see the creation and development of a global alternative order embodied by the BRICS initiative. The latter is the target of hybrid warfare attempts aimed at slowing it down or even stopping it.[8] Of course, it is useless to get flustered about predictable opposition from certain quarters but, at the same time, awareness and countermeasures may be required.
The Summit and prospects
The evolution towards a new world order is not a sprint but a full-fledged marathon.[9] The upcoming Summit was an opportunity for intense work between members at the highest level and helped refine the roadmap leading to a new stage in the development of the BRICS.
As many had predicted, there were no sensational and disruptive announcements, to live up to the expectations of the media about the introduction of the BRICS currency. Convergence is a slow and complex process. On the other hand, a step forward relative to expansion of membership was taken.
One thing is certain: the BRICS, as an irresistible trend, will continue to develop, sweeping away all obstacles, despite its slowness and the turbulences that lie ahead, along the way. A new world is possible, although the road is long and winding.
On the other hand, the possibility of a dialogue between the BRICS and the G7 is not to be ruled out, either, in the medium and long term. One day perhaps, they might find a way to work together in an unprecedented multipolar structure, starting with the acceptance of one or two members of the G7 as observers at the BRICS summits, and later, allowing them to join in closer cooperation within the broader framework of the G20.
Author Brief Bio: Alex Wang is former executive manager of a World TOP500 company. He has assumed, during his long career, key responsibilities in domains of HR, sales, wholesales, procurement & supply chain and open innovation. As the founder of JAC (“Joint Alliance for CSR”) established in 2010, Alex has contributed greatly to the CSR development in global telecom industry. As the honorary chairman of TESFEC (Association for Ecologic transition & Solidarity), Alex actively participates in SDG development. Holder of two PhD (philosophy & engineering), Alex is an active geopolitical writer.
References:
[1] https://www.reuters.com/world/brics-poised-invite-new-members-join-bloc-sources-2023-08-24/#:~:text=JOHANNESBURG%2C%20Aug%2024%20(Reuters),order%20it%20sees%20as%20outdated.
[2] Michel Camdessus, La scène de ce drame est le monde, treize ans à la tête du FMI, Les Arènes, 2014.
[3] Plus de 40 pays veulent rejoindre le groupe des BRICS, selon l’Afrique du Sud, TRT AFRIKA, 21 juillet 2023.
[4] Yaroslav D. Lissovolik, BRICS-Plus: the New Force in Global Governance, RIAC, Moscow, Russia.
[5] Balinder Singh and Dr. Jagmeet Bawa, Reshaping Global Dynamics: BRICS Summit 2023 And Emergence Of New Geopolitical Era – Analysis, August 15, 2023.
[6] S. Jaishankar, The India Way: Strategies for an uncertain world, HarperCollins, 2020.
[7] Balinder Singh and Dr. Jagmeet Bawa, Reshaping Global Dynamics: BRICS Summit 2023 And Emergence Of New Geopolitical Era – Analysis, August 15, 2023.
[8] Pepe Escobar, The Hegemon Will Go Full Hybrid War Against BRICS+, June 10, 2023.
[9] Ray Dalio: Principles for dealing with the changing world order, Simon & Schuster, 2021.
